Initial U.S. jobless claims probably can’t go much lower

The weekly tally of how many Americans are applying for new unemployment benefits may have reached the end of its usefulness to investors and consumers — at least until the economy stumbles again.

Initial jobless claims have fallen under the key 300,000 mark for three straight weeks and five of the past seven, touching as low as 279,000 in mid-July. That marked a 14-year low.

Yet the number probably can’t go much lower. The 279,000 figure, for example, is the 12th lowest since 1980. And new claims have only dropped below 300,000 in 105 out of 1,812 weeks in the past 35 years. That’s just 5.7% of the time.

What claims tell us now is that layoffs are at a modern record low. What the report can’t tell us is whether hiring is increasing, and how fast. For that we have to rely more on broad employment measures such as the government’s official jobs report and the ADP hiring report, among other things. And both show job creation occurring at the strongest pace since the recession ended.

Yet despite all the progress, the unemployment rate is much higher now than it usually is when claims are this low. The jobless rate was 6.1% in August vs. 4.8% in 2006, when average claims were also just under the 300,000 mark. Also, long-term unemployment – people out of work six months or longer – remains elevated and millions of Americans who want a full-time job still can’t find one.